Is Trump Going to Declare Martial Law?

What Happens to Economies When Authoritarians Cross the Rubicon

Don’t take it from me, in case I sound “alarmist.” Take it from the man who wrote the tweet above, Ben Hodges, the former commanding general of US Army Europe. He’s drawing a parallel to Nazi Germany. Because “US defence secretary Pete Hegseth has sparked widespread concern among defence experts and military officers with an abrupt decision to summon hundreds of generals and admirals to Virginia next week.”

Did your ears perk up yet? All of that raises the question, which I suppose intelligent minds have been wondering for quite some time now: is Trump going to declare martial law?

The answer to that is: yes. Not in the way you might imagine, as in, at this meeting, right away. This meeting, as former General Hodges implies, is more a test of loyalty, or perhaps fealty is a better word, with such obviously fascistic overtones that it’d be comical if it weren’t so repellent. Some of the world’s finest and most thoughtful military leaders and minds…at the beck and call of a bleary-eyed Fox News Host…demanding capitulation to an authoritarian. This is the obscene territory we find ourselves in, and make no mistake how dangerous it is.

I want you to zoom out with me for a moment, before we come to the steep consequences of crossing a Rubicon as severe as declaring martial law.

In authoritarian collapses, certain events, features, happenings, are commonplace. They’re expected, because they make up the textbook pattern. And one of those is, of course, the declaration of martial law.

So let’s think about it that way. It’d be more unusual if Trump didn’t declare martial law than if he did. Because of course this is what authoritarians do. Want to do, itch to do, love to do, to demonstrate their power, to make an example, to punish, control, intimidate, and coerce. That doesn’t mean it’ll happen tomorrow, but it does mean that the risk is so severe as to be almost certain. An authoritarian not declaring martial law? Come now.

And of course you can already see events bending that way. America’s already slipping towards it. The military deployed in city after city, on various flimsy pretexts—and the real reason, as we all know, is simply to intimidate into line those the authoritarian doesn’t like, who dissent or oppose him, power centers of the opposition. The militarization of everyday life is a slippery slope, and the slope ends at martial law.

So. The declaration of martial law is an eventual if not certainty then something much, much more than mere possibility. It is a severe risk. It might begin in this city, or that one, for this pretext, or that one—doesn’t matter. The point is this.

To get through the remainder of Trump’s term without martial law being declared would be something of a minor miracle, given all we know about classic cases of authoritarian collapse. And it is a severe risk in that sense: not just that the price will be high (I’m coming to that,) but rather, that the probability is very (very) high.

But America isn’t thinking about its plight these days clearly. It still regards the slippery slope of authoritarianism as firm ground, which it eminently no longer stands on. Please consider that carefully as you plan and think.

Now. What would the imposition of martial law, this eventual near certainty, do? I don’t mean socially—that much is obvious. I mean: to wealth, finance, and the economy?

Thee imposition of martial law would trigger severe consequences for America. So far, America’s been skating by, markets sort of dancing around an authoritarianism penalty. It’s as if the world doesn’t want to full plunge America into the abyss, by withdrawing its capital all at once. The dollar’s plummeted, but…there is a long, long way to go, as we discussed when we considered how much the British Pound was worth before and after the fall of empire (twenty cents on the dollar, in case you forgot, just to highlight the price of risk at stake here.)

Trump declaring Martial law would be a Rubicon that the global economy could no longer ignore. And my guess is that global capital would begin to run for the doors, fast, if not instantaneously. It would trigger runs on the dollar, on US bonds, especially long term debt, which the Treasury’s already manipulating, to create the illusion of demand, not to mention almost certain crashes in stock markets.

That’s before we get to the effects on the real economy. How many businesses would hire—LOL—under a state of…martial law? Invest? Martial law isn’t exactly known for, say, inducing people to go out party, spend money, shop, and enjoy fine dining—it’d quite obviously cause a sudden, sharp slowdown in economic activity across the board, from consumption to hiring to spending to investment.

The best way to understand is to think of what’s happened in other countries, usually less wealthy and developed ones, when they hit such dramatic political breaking points. The consequences are what are known as “sudden stops” in the literature—that means what it sounds like, investment, consumption, hiring, etc, all suddenly “stop,” in response to a shattering, meteor-strike level economic shock.

And of course, that doesn’t just mean domestically, it means internationally, as in, what’s being invested in by outside parties. Because of course, if a dictator can declare martial law, then there goes the everyday civil rule of law, and that is what protects capital. In this situation, nothing is left that protects capital, and I hope you understand that’s not some kind of exaggeration, it is a literal fact of authoritarian collapses. It is why money flees political shocks like martial law, because then we are at the point where the regular rule of law can no longer protect or guarantee the integrity of wealth.

I suggest that you take all this seriously. Not hysterically, just seriously. I know that most of your financial advisors aren’t having these discussions with you, and I know, too, that most boardrooms are pretending like None of This is Really Happening. That is because all this is way, way beyond them. Don’t pretend. I’ve cautioned you that I’m not saying it’ll happen tomorrow. But it is very, very likely to happen. Just as snake is likely to bite, an authoritarian is likely to declare martial law. And we know that the consequences of that are for wealth, economies, and finance. The question in America is: who’ll be left holding the bag? Don’t let it be you.

By the way, yes, the social consequences of martial law will be severe, too. I don’t mean to skip over them, but I imagine, or hope, they’re more obvious than the financial ones. The point is to crush what’s left of a sane society, to stamp it under the authoritarian boot, by eviscerating basic freedoms of expression, association, and movement. And of course, as that happens—all too often, a society is quick to forget that it was ever free at all.

Love,

Umair (and Snowy!)